Citigroup cuts 4,500 jobs amid worsening eurozone sovereign debt crisis

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Citigroup Inc is gearing up to minimise capital costs by cutting down about 4,500 jobs in coming quarters and record a $400 million charge in the quarter for severance and other expenses related to the layoffs. Many analysts are seeing it as a bid to reduce costs due to the European sovereign-debt crisis.

Speaking at the Goldman Sachs Financial Services Conference in New York, Citibank Chief Executive Vikram Pandit said cuts would be completed over ?the next few quarters? and would come from a range of businesses that will likely affect the competitive landscape in the coming years.

Citigroup is the third-biggest US bank by assets and the cuts are equal to about 2 percent of Citi?s workforce of 267,000 employees at the end of third quarter 2011.

The group is becoming the latest large bank to trim staff, and joins the chorus with other banks worldwide that have cut more than 120,000 jobs due to tight industry regulations taken as economic recovery continues to remain fragile.

Around 4,500 job cuts amount to 1.7 percent of Citigroup?s workforce on Sept. 30 and would still leave the group with almost the same amount of staff it had at the end of 2009, when the firm employed about 265,300 people, regulatory filings show.

Earlier this year, Citi rival Bank of America Corp (BAC.N) announced plans to cut 30,000 jobs and slash $5 billion in annual expenses as part of a programme known as ?New BAC,? a play on the company?s ticker symbol.

Pandit said the company is investing in emerging markets such as Brazil, China and India, which now account more than half of the bank?s profit. He says that the banks reductions would involve its proprietary trading units, which are being wound down. ?Those economies may expand at 6 percent a year through 2015, eclipsing developed markets, which may grow less than 2 percent,? he said.

The Citi’s previously disclosed expense reduction programme generated $1.4 billion in savings so far this year, nearly 4 percent of the bank?s $37.72 billion of operating expenses in the first three quarters. On the New York Stock Exchange, it shares closed down 8 cents, or 0.27 percent, at $29.75.

As per Pandit, Citigroup?s lending business in its securities and banking operation would also record a loss of about $300 million tied to hedges if the quarter ended on 5 December. Hedges are bets that firms make when seeking to curb potential losses on existing positions.

Citigroup opened 65 branches through the first three quarters of this year, mostly in Asia and Latin America, Manuel Medina-Mora, the bank?s consumer head. It slid 0.3 percent to $29.75 yesterday and has dropped 37 percent this year.

Since Vikram Pandit became CEO in December 2007, Citi has cut more than 100,000 jobs through release and sales of distressed assets and businesses from the New York-based lender?s Citi Holdings unit.

In third-quarter profit, Citigroup posted a 74 percent increase, aided by a $1.9 billion accounting gain that softened the impact of lower trading and investment-banking revenue. The bank?s revenue for the period fell 8 per cent to $18.9 billion, excluding the accounting figure.

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